High-frequency data from the U.S. Census Bureau during the COVID-19 pandemic: small vs. new businesses.

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From: Business Economics(Vol. 56, Issue 3)
Publisher: Springer
Document Type: Article
Length: 7,508 words
Lexile Measure: 1600L

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Abstract

Small businesses experienced very sharp declines in activity, business sentiment, and expectations early in the pandemic. While there has been some recovery since then, multiple indicators of small business performance remained substantially in the negative range early in 2021. These findings are from a unique high frequency, real time, survey of small employer businesses, the Census Bureau's Small Business Pulse Survey (SBPS). In contrast, results from the high frequency, real time, Business Formation Statistics (BFS) show there has been a surge in new business applications following an initial decline. Most of these applications are for likely nonemployers; however, there has also been a surge in new applications for likely employers, especially in Retail Trade (and especially Non-store Retailers). We compare and contrast the patterns from these two new high frequency data products that provide novel insights into the distinct patterns of dynamics for existing small businesses relative to new business formations.

Keywords COVID-19 * Small Business Pulse Survey * Business Formation Statistics

1 Introduction

In the early stages of the COVID-19 pandemic, the Census Bureau introduced new data products designed to capture its impact on the American economy and population (Buffington et al. 2021b provides an overview). We describe the results from two new business data products designed to provide geographically granular, timely, and high-frequency information about the impact of the COVID-19 pandemic on businesses: the Small Business Pulse Survey (SBPS) and the weekly and monthly Business Formation Statistics (BFS). (1) We thus focus our attention on small businesses through the SBPS and potential new businesses through the business application series from the BFS.

Results from the first three phases of the SBPS, running from April 2020 through January 2021, show existing small businesses experienced very sharp declines in activity, overall sentiment, and expectations early in the pandemic, and that while these later became less negative, they were still in a substantially negative range by the first week of January 2021. (2) The patterns for new business applications from the BFS are in sharp contrast. After an initial decline, the BFS shows a strong surge in new business applications both for those that are likely to lead to a business with employees ("employers") and those that are likely to become businesses without employees ("nonemployers"). In fact, 2020 is the highest year for business applications since the series started in 2004, with most of this surge occurring in the second half of 2020.

There is substantial sectoral variation evident for both existing small businesses and business applications. Small businesses in some service sectors have been especially hard hit, which we highlight by focusing on two extremes in our discussion of the SBPS: Finance and Insurance, and Accommodation and Food Services. Small businesses in Accommodation and Food Services show much more negative outcomes than those in Finance and Insurance. These results are consistent with official statistics on revenue and employment. As shown in Table 1, revenue for Finance and Insurance was little changed comparing 2020:Q4 and 2019:Q4, but that is not the...

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Gale Document Number: GALE|A673455236